China’s Middle Class

1. China’s Middle Class An emerging social group

2. Middle Class • Originally, those inhabitants of medieval towns in France who occupied a position somewhere between the peasants and the landowning nobility were referred to as Bourgeoisie • The bourgeoisie later became synonymous with the middle class.

3. Wealth & Democracy • Independent middle class was associated with democratization in history • However, there is no necessary connection between economic prosperity and democracy

4. In China • Modernization had already started well before the reforms • modernizing state system and bureaucracy • most of GNP derived from industries • substantial service sector in economy

5. By late 1950s • Party-state controlled almost all industry and commerce • Petty commodity economy remained • marginal • low status • legally tenuous • politically risky

6. By 1970s • Public versus private interests • Public was increasingly dominated by empty ideological rhetoric and ritualistic action • Private consisted in the promotion and discussion of particularistic interests through the back door and in the back alleys of the system

7. In Reform Era • Reform measures and economic growth have since brought about • endorsing the pursuit of private material interests • greater economic and social diversity and political openness • remarkable individual wealth to certain groups of people

8. Late 1970s & Early 1980s • Private production and commerce were legalized • Individual (or household) enterprises [geti] • small operations (less than 8 employees) • officially sanctioned as a “necessary supplement to the socialist economy” • 32 million geti employed 66 million people by the end of 2009

9. Late 1980s • Private enterprises [siying] • each has more than 8 employees • recognized and confirmed by Zhao Ziyang • legalized by constitutional amendment in 1988 as a ``supplement to the publicly owned economy” • investors have property ownership and inheritance rights

10. From 1999 to 2009 • Private enterprises [siying] • increased from 1.5 million to 7.4 million • investors increased from 3.2 million to 16.5 million • employees increased from 20 million to 86 million • Since 1992 siying GDP grows at 60% a year and tax grows at 80% a year

12. Employees in Private & Household Enterprises (2009)

13. Actual Size of Private Sector • Official figures understate the real size and significance of the private economy in China today • confusion in classification of township and village enterprises • intentional obfuscation by entrepreneurs or officials • difficulty in classifying new hybrid forms of enterprises

14. New Middle Class • Owner-operators • private entrepreneurs • Managers • state capitalists • social capitalists • suburban executives • Service providers

15. State & Middle Class • Party-state remains central to China’s economic development and to its emerging new middle class • Middle class of the reform era have emerged from within the local ``establishment”

16. Socially & Culturally, ... • Socially, the new middle class are characterized by intense parochialism • remarkably limited social mobility • identification with native place • Culturally, the new middle class are trendsetters, especially in consumption patterns

18. Politically, ... • The new middle class are not alienated or independent from the party-state • They operate in close proximity and through close cooperation with the party-state • In a 1997-1999 survey at 4 counties, 16% of private entrepreneurs had run in village elections

19. Private Business • Change in the rhetoric: • marginal => ``supplement” => ``necessary supplement” => ``necessary component” => ``organic part” • Economic justification: • create jobs (3/5 of new firms, 1/5 of new jobs) • pay taxes • donate to charitable causes

20. ``Three Represents” • A CCP document in 1989 barred private entrepreneurs from entering the Party • Difficulty of implementation at grassroots • in a 1997-1999 survey only 27% of county officials supported the ban • In 2001, Jiang Zemin: CCP represents the ``requirements of the development of advanced productive forces”

21. CCP Members